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The secret plot to derail the Greek bailout

Warning:  This is a very long post but a very important one to read...  

** To break up a potentially long read, we have injected photos of butterflies, both because they are lovely to look at and they symbolize 're-birth' which is the grande theme of this post.  We talk of Greece trying to prevent default... if it was a caterpillar, it would be like trying to prevent chrysalis.

So we begin..  

There are two ways a corporation or nation defaults..

1)  The corporation or nation openly declares bankruptcy

2)  The corporation or nation does everything humanly possible to avoid it but powerful forces behind the scenes ensures it happens to their benefit

Greece should have taken option #1, for revenge sake

Instead in spite of public pronouncements and agreements to the contrary, they are being forced into option #2, and to be honest, we are unsure if the Greek leadership, much less the people even know or understand this...

We at A&G have done much research and have written extensively on this topic, not because our focus is usually Greek concerns or possess any ethnic or emotional ties to the country.    We cover it because we see the default at minimum as the first 'Victory' in the war against banking and finance; the first Real and Genuine pain the financial elites will feel since September, 2008.   

And when it comes, it will be long overdue.

As we said previously, we've done much study and there are two questions we couldn't fully understand in this geopolitical chess game-  1) Why was an agreement made in Brussels on Sunday night when many of the involved parties truly want Greece to default and be gone from the euro?, and 2)  What role is the US playing, especially financially in this kabuki, especially since everyone knows the US bails out the world?

After reading an array of sources, we feel we finally have a much better understanding of the complex theater being enacted before our eyes and can piece together a timeline as to what has happened recently and what is going to occur over the next four weeks (Greece must pay its next installment of debts by March 20th- that is not a flexible date)

On Monday, January 16th, Presidential staff and Fed advisers convened with a dozen or more top Wall Street bankers. Its purpose was to brief a select group on the White House and Geithner approved operation to amputate the eurozone’s obviously gangrenous Greek leg.

Just 24 hours later, a remarkable undercover bailout slush fund was set up for the use of the ECB under Mario Draghi. On that day, the financial website Wealth Wire posted a piece suggesting the Fed was ‘up to something mysterious', and Jonathon Trugman of the New York Post’s financial desk wrote this: ‘Essentially, we just bailed out Europe’s banking system with the full faith and credit of the United States’.

Subsequently, a former Fed official told the Wall Street Journal that the Reserve was indeed bailing out Europe by operating in the shadows – aka a loan masquerading as a currency swap.

Former Vice President of the Federal Reserve bank of Dallas, Gerald O’Driscoll told the Journal:

“The Fed is using what is termed a “temporary U.S. dollar liquidity swap arrangement” with the European Central Bank (ECB).  Simply put, the Fed trades or “swaps” dollars for euros. The Fed is compensated by payment of an interest rate (currently 50 basis points, or one-half of 1%) above the overnight index swap rate. The ECB, which guarantees to return the dollars at an exchange rate fixed at the time the original swap is made, then lends the dollars to European banks of its choosing.

The two central banks [ECB and US] are engaging in this roundabout procedure because each needs a fig leaf. The Fed was embarrassed by the revelations of its prior largess with foreign banks. It does not want the debt of foreign banks on its books. A currency swap with the ECB is not technically a loan.”

Well, swap or loan, it all went into the eurobank prop-up operation.  During the period following that transfer, the ECB lent $483bn in various amounts to just over 500 banks in the eurozone. 

So let's stop here and refresh what's happened so far-  US taxpayer $$ has been used once again to bailout Europe's banks and financial institutions.  If you ever wonder how the US has so much pull and sway in the UN and in economic, military and geopolitical affairs, perhaps this type of 'deal' answers it.

Let's continue..

That swap i.e. 'loan' deal was outlined to the key Wall St players on January 16th. In a nutshell, it was “We bale out the eurobanks for Mario, and in return they [the EU States] build a firewall around Greece”. It was the start of what became known as ‘amputate and cauterise’. Goldman Sachs played a pivotal role in the session.

The US view is this: Greece must default outside the euro, and become a leper.  Secretary Geithner thinks the Europeans don’t have the money to make the banks ultra-safe…and that means an immediate contagion blowback to the US, with disastrous consequences. (It also means Obama's re-election chances are severely hindered if the US experiences anything close to another 'Lehman') 

So we, the US, must covertly help the ECB render the eurobanks safe – and in return, they need to step up to the plate by leveraging whatever firepower they need to ensure the whole mess stops at Greece.

Simple.

The key players at this meeting were Timothy Geithner, Goldman Sachs' Lloyd Blankfein, a tight group of White House Obamites, Ben Bernanke (at “a safe distance”), Mario Draghi, and IMF boss Christine Lagarde.  The President as well as Secretary of State, Hillary Clinton were fully aware of the meeting but neither attended.

As a consequence, from this point onwards Christine Lagarde began to play serious hardball about the need for a massive firewall investment by EU member States. Concurrently, Secretary Clinton applied every ounce of available pressure to the Sino-Japanese credit line as a potential further source of bricks in the wall.

Clinton’s State Department seems to have had some degree of success. Less so Lagarde: she has come up hard against Berlin’s refusal to expose Germany further.

The view in the Fed and Washington is that the Europeans are welching on the deal which is peculiar since really they never had Berlin on board in the first place.  Germany does not want to expose themselves to even greater debt, and recently their legislative body enacted legislation prohibiting it.  At the recent G-20 meeting, Lagarde has threatened to pull funding for the Greek bailout unless the IMF gets their way and a 750bil euro firewall is created.

So that's were things stand today, February 24th.  Everyone wants a Greek default except for the 'chess piece' in the game that should have wanted it all along, and thus now is reduced its significance to that of scapegoat 'pawn' -- Greece.

And in case you think we didn't provide enough evidence to explain why Greece will be defaulting soon (even if it doesn't want to), here's a few more reasons:

* The credit rating agency S&P today joined Fitch and Credit Suisse in seeing the Greek Bailout as akin to 'default'.  From appearances, it seems all will call default one second after the bond swap officially takes place. Whether that triggers CDS (credit default swaps) remains to be seen...

* The Greek consitutional change demanded by the Troika (to hierachise debt before other expenditure) will not be possible by the Greek bailout closure date. And they knew that all along.

* European creditor countries are demanding 38 specific changes in Greek tax, spending and wage policies by the end of this month and have laid out extra reforms that amount to micromanaging the country’s government for two years, according to the Financial Times. There is no way the Greeks will stand for that either.  The program is being set up to fail, as many of these conditions will be impossible to achieve

* In an interview with the Wall Street Journal, Mario Draghi’s support for the deal remains understated bordering on tepid: he suggested that the sceptical market response to Tuesday’s rescue deal suggested many doubted Athens would follow through on a promised austerity cure. “It’s hard to say if the crisis is over,” he warned.

* Commerzbank AG Chief Executive Martin Blessing yesterday said of the Brussels deal, “The participation in the haircut is as voluntary as a confession during the Spanish Inquisition”.

In summary:  If Greece does not default by March 20th, it will be an outright shock to A&G since so many major players in the secret contagion 'game' are working very hard behind the scenes to make sure it does happens.  The goal is to cut off the financial bleeding at Greece before spreading to bigger and more important nations that require too much funding to bail, and because many believe they will be insulated by any financial blowback, thus the potential for a financial tsunami turning into a ripple.   

We believe they are wrong on both accounts.

Greek bailout update 2/23/11

We stated the other day that the G-20 meeting in Mexico may present itself as the first sincere and major impediment to all the corrupt leaders and bankers pushing the 2nd Greek bailout through.

A&G has made no secret we hope it fails and Greece defaults...

Bankers, financials and investors Must finally feel economic pain... Its been 40 months since Lehman Bros collapsed and all the economic powers of the world, mainly the US, did everything humanly possible (create $ out of thin air and give to evil banks) to protect them...  It Must end at some point.

Here's more optimism that outcome will come about:

"Germany's ruling parties are to introduce a resolution in parliament blocking any further boost to the EU’s bail-out machinery, vastly complicating Greece’s rescue package and risking a major clash with the International Monetary Fund... The IMF has hinted it may cut its share of Greece’s €130bn (£110bn) package and warned that its members will not commit $500bn (£318bn) more in funds to ringfence Italy and Spain unless Europe beefs up its rescue scheme.  " -- Telegraph UK

We've been burned so often on this issue..  The baddies always pull something out of thin air (or their asses) and 'win'... But at least as of today, it looks more promising of a Greek default than 4 days ago...

Dow 13,000: April 2007 vs Today

~ April 23, 2007 New Yorker

Today it looks like the market will reach the 'magic' 13,000 mark, or at least tease it.   Shouldn't be a surprise to people to see the Dow so high yet the everyday economic conditions for most people deteriorating when you realize the Fed has pumped $7 Trillion into the US markets specifically (not counting the Trillions given to corporations and foreign banks) since 2008

And because the term 'trillion' gets so diluted in its meaning when its spoken of repeatedly, here's a very brief reminder of what a trillion dollars looks like:

$7,000,000,000,000  --  A '7' followed by 12 zeros 

If the Fed had chosen to spend $7 Trillion dollars to bail out the American people instead of banks, financials, corporations and the stock market, every man, woman and child that make up the 310 million population, would have received $22,580 each.

Talk about Really stimulating the economy..

But let's move beyond that...  let's do a little time travelling, back to when the stock market hit 13,000 for the first time ever (April 25, 2007) and do some compare/contrasting to see if things are truly better or not...

~ April 23, 2007 cover: JaMarcus Russell turned into a Big star didn't he?

_____

* Unemployment rate in April, 2007 was 4.5% with 6.8 million people without jobs.  

In January, 2012, it was 8.3%.  

Let's pretend for a moment the Bureau of Labor Statistics didn't purposely fudge the numbers by counting those given up looking for work as not unemployed, 'officially' 12.8 million Americans are out of work, an increase of 6 million people.

* Housing starts (building of new homes) was at 211,900 for April, 2007.  

In January, 2012, the number was 197,900.  

So 14,000 less homes are being built even though the US population grew by 8 million people in 4 years (302.2 mil people in '07; 310 mil. people in '11), and interest rates kept artificially low for an insane period of time.

* Consumer Confidence in April 2007 was listed at 106.3.  CNN/Money at the time described the prevailing mood as "consumers shrugged off record high gasoline prices and falling home values, focusing instead on gains in the stock market and a strong employment picture."  

January, 2012, Consumer Confidence was 61.1, which was down from 64.8 in December, 2011 and overall down a whopping 45.2 points from April, '07.

~ Time magazine US & Global cover, April 23, 2007 - pathetic I know...

* National average for gas price in April, 2007 was $3.11.  

Today it is $3.59 according to Consumer Reports. 

Filling a vehicle with 15 Gal/week for 52 weeks in April 2007 would have cost a driver around $2,425.  Today if prices stayed as they are for a full 52 week year, the driver would pay around $2,800, an increase of $375  There goes that payroll tax cut savings...

* Average home price in April 2007 was $311,700 according to the Census bureau.  

 As of October, 2011, the average home price was $242,300, a drop in value of $69,400!! (22%) in a span of only 4.5 years.

____

I think you get the point...

So when you hear the media trumpeting terrible statistics as progress or 'recovery', try to put things in a more proper perspective..

And don't be celebrating Dow 13,000 too hard...

~ Amazingly, this was the cover on April 23, 2007, 18mths before election

Default looking more & more likely

Very brief post..

Its looking more and more like all those politicians, bankers & financiers who negotiated for 12 hours in Brussels for a 2nd Greek bailout basically wasted their time, because it is looking more and more like the March 20th default for Greece is still on, and perhaps, may occur even sooner, if all things progress without any more Insipid meddling...

"Fitch (credit rating agency) said it was downgrading Greece to “C” from “CCC,” and would follow up with further downgrade to a “restricted default” when the (Greek) bond swap is completed.’" -- Reuters

So what does that mean?  The main bond swap is scheduled for March 10, and at that point, Fitch will name the event as a technical default. What is the ramifications for credit-swap insurance?  That’ll depend on what deal, say, Hedge Funds have signed with specific insurers.  But you could certainly speculate that some insurance will be triggered.

The downgrade is an early blow for those who put the Brussels accord together just 36 hours ago….and quite possibly a victory for others who always wanted it to fail.

Like us at A&G

Another day in the Greek soap opera...

Another day in the Greek soap opera...  A reason to 'Hope'.. yes we know we've pooh-pooh'd the term viciously in a precious post but cut us some slack at A&G... Monday was a depressing day.

Less than 24 hours ago, evil, self-centered Greek politicians worked in concert with European and global banking interests to destroy Greece once and for all via a 2nd bailout 'officially' at €130bn but really at €245bn.    

Yes, Monday was a downbeat day to be sure... especially because banks, investors and the market were so upbeat on the news, and any time they're smiling, it must be something awful...

But, alas there's hope it will still unravel and Greece will default by March 20th:

"At a G20 summit in Mexico in two days the EU will plead for increased IMF contributions by non-euro countries to help shore up a eurozone "financial firewall" seen as vital to protecting Spain and Italy from Greek debt contagion.  The IMF will refuse to make extra cash available to the EU and will threaten to pull the plug on its contribution to Tuesday's €130bn bailout of Greece unless the eurozone creates a €750bn fund, a move opposed by Germany...

"Germany has opposed previous calls to merge the two funds because it will increase Germany's liability and exposure to a eurozone default by 50pc, an issue that threatens a serious Bundestag backlash or revolt against Angela Merkel's effort to get agreement on more aid for Greece."  -- Telegraph UK

We've all been down this road before, and the baddies seem to win so often that it seems foolhardy to get snookered in to all the day by day news...  but even though we lampooned the word a few days ago, A&G is hopeful the bailout will be derailed and the financial world be Forced to swallow some very Bitter medicine starting in late March.

Video: Understanding Greek bailout in 4min..

This post is on Greece but First thing First... The US media is Horrid!..

Dreadful and horrid..

Let's just state that upfront-- it is pro-corporation, pro-Wall St, constantly distorts truth to fit ideological purposes (whether it be Left v Right or USA #1) and will do everything in its power to brainwash every man, woman & child in believing in a faux 'recovery' with full credit given to the current President.

The US media refuses to cover the devastation and real-life suffering of this current depression-- those living in homeless shelters, tent cities or in their automobiles... the heavy dependence on government assistance-- food stamps, welfare, unemployment benefits, etc simply to scrape by.. the continual systematic destruction of the middle class...  The US media shows None of it.

And when it comes to Greece, the only headline they wish to trumpet is that Greece got a second bailout i.e.  problem solved, let the recovery commence.

For honest written journalism, we read British finance papers and the German publication, Spiegel.   And for televised news, we much prefer Russia Today (RT)

The above video is 4:15 long.  The interviewee is Rodney Shakespeare, a political analyst and professor of Binary Economics, and afterwards you should get a true understanding of where Greece and the rest of the world stands in terms of the Eurozone, global banking and how bad things are & continue to be for a nation that is for all intensive purposes, a colony.

If video doesn't show up or play, click link below:

http://www.youtube.com/watch?v=YnccQngx_AQ&feature=player_embedded